Harmony swings into loss as profits plummet

Harmony Gold reported a R1 billion loss for the year ended in June as profits plummeted 120%.

This was in comparison to a profit of R5.12 billion in the previous year.

Harmony, which mainly operates old and deep gold mines in South Africa, on Tuesday reported a 2% increase in revenue to R42 billion for the year ended in June, while the average gold price received increased by 5% to R894 218 per kilogram.

Group gold production for the period decreased 3% year on year to 46 236kg mainly as a result of safety-related stoppages, mining constraints and supply chain disruptions at operations in South Africa. Production at Harmony’s Papua New Guinea operation was severely impacted by the overland conveyor belt failure at Hidden Valley and geotechnical instability.

Group all-in-sustaining costs of R835 891 per kilo was also higher than Harmony’s upper end guidance of R835 000 per kilogram. Net debt increased by R215 million to reach R757 million.

Despite the loss, the company declared a final dividend of 22c per share.

Harmony CEO Peter Steenkamp said the group had managed to end the year on the front foot.

“The strong fourth quarter has carried through into the new financial year, and I am confident we will again deliver on our strategic objective of safe, profitable ounces in financial year 2023,” he said.

 “We have a clear strategy to prioritise capital for high-grade and high-margin projects that will generate the best possible returns, ensuring we meet our long-term objectives [and deliver] meaningful returns to our shareholders while at the same time effecting positive change and maintaining the trust of all of our stakeholders.”

Safety remains a challenge for Harmony which saw its year-on-year loss-of-life injury frequency rate regress from 0.11 in the 2021 financial year to 0.13 in the year ended in June. Eight of the 13 lives lost in this year occurred at the Kusasalethu mine.

“We have engaged the unions and mine management to ensure everyone is fully committed to prioritising and improving safety at the mine. Dedicated training for the engineering departments, alongside other safety initiatives, has been implemented to ensure we never have a repeat of the tragedy experienced this financial year,” Steenkamp said.